“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

A Smart City in Your Pocket: From top-down command centers to bottom-up app markets

January 10, 2016 By Nolan Gray

Decentralized, voluntary, and smart.

Cities, for most of human history, were dumb. At least, that’s what the “smart cities” movement might lead you to believe. Over the past few years, a chorus of acquisitive multinational tech corporations, trend-savvy politicians, and optimistic developers­­—an odd mixture of former SimCity players, in all likelihood—has come to sing of technology’s potential to solve urban problems. Through implementation of technologies like augmented physical infrastructure, central command centers, and information exchange, proponents of smart cities argue that information technology offers new solutions to old problems like trash collection, public health, and traffic congestion. While the movement’s ideological variations are many and varied, a focus on top-down smart city solutions has ultimately distracted urban observers from the bottom-up smart city revolution that’s already underway.

In his 2014 book Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, scholar Anthony M. Townsend paints a troubling picture of the former in Rio de Janeiro’s modestly titled Center for Intelligent Operations. Developed by IBM, the center acts as a hub for hundreds of surveillance cameras and sensors. At best, the center achieves little more than, in Townsend’s words, “looking smart.” At worst, the center seems to be a regression back to twentieth century centralization. Townsend’s explorations of Songdo, South Korea, a city purported to be both centrally-planned and smart, hardly quells these concerns. The discussion leaves the reader with a healthy skepticism of top-down smart city solutions.

Other criticisms have made the top-down smart city feel less like something out of 1984 and more like something out of Terry Gilliam’s Brazil. In a couple of recentposts, Emily points out the roadblocks presented by poor incentives and a lack of market signals, both for politicians and high-ranking public servants. For similar reasons, both parties lack the incentives to implement smart city solutions that create long-term value for urban residents. Operating outside of a system of profit and loss, both groups are all too often working for the next job, whether that means the next election or a cushiony private sector position. Without hard prices to discipline spending and communicate value created, would-be smart city planners bump into the same problems as economic planners of the twentieth century, building complex, rigid plans that rapidly decline in efficiency. As Emily puts it, public officials “transact to win public support, gain power, or improve their financial opportunities after leaving office,” rather than to create actual value for the purported beneficiaries of their projects. Often, merely “looking smart” is more than enough for public officials to secure these rewards. The result is repeated infrastructure boondoggles, minimal innovation in public services, and a generally dumb state of city management.

For all the focus on top-down solutions, however, too much of the conversation has missed the urban revolution that’s already underway. In fact, it’s likely happening right now in your pocket. Enabled by the platform offered by smartphones, a growing ecosystem of apps is solving major urban issues as we speak. Can’t find a cab? There are multiple apps for that. Not sure of the best route to work? Same story, and it’ll even take into account current traffic conditions. Trying to meet new people in your community? The real question is: would you prefer a hookup or a Star Wars enthusiast group? Those two purposes require separate apps­—for now—but they’re both there.

By combining the open institution of app markets with the technology of smartphones, apps allow solutions to urban problems to develop from the ground up. Rather than flowing from dusty city halls and uncomfortably clean corporate offices, the true smart city revolution up to this point has emerged from the efforts of millions of app developers and app users working together in a largely free, voluntary environment. Understanding how this happens might reveal how urban governments could be brought into the process of creating smart cities.

Apps have solved so many urban problems because their developers operate in a market. As in any functioning market, users have needs, and developers are itching to solve those problems, whether to earn some money or develop a reputation. Developers have strong immediate incentives to develop useful fixes to common problems—namely, profit and loss. When a developer comes up with a smart way of, say, identifying the best restaurants your neighborhood, they create value for urban residents and immediately receive the benefits of offering this new service.

Along with incentives, the public sector lacks another key component of the app market: trial and error. The first apps to allow real time information exchange among urban residents weren’t Facebook and Twitter. Rather, the two emerged triumphant out of a long series of failed and on going experiments in connecting people, from Friendster to SixDegrees. Even now despite the dominance of a few apps, heavyweights like Facebook and Twitter still compete in a dynamic marketplace of new and emerging social networking apps that offer new services to users. Apps like Instagram and Snapchat arose from the hypothesis that users might prefer to share photos rather than text. Apps like WhatsApp and Line revolutionized texting by offering minor tweaks to the old SMS system. By permitting trial and error the app market allows not only for constant innovation, but also real-time responses to the changing needs of connected urbanites.

Where some kinds of incentives can be found in government, the services offered are still, by their very nature, monopolistic. Let’s say you lose your license: if you’re lucky, there may be multiple DMV offices around town, but the same bureaucracy runs all of them. As with all monopolies, the DMV is typically remarkably inefficient, offering service so awful that the name of the office is synonymous with frustrating bureaucracy. Given the lack of competition and experimentation, there’s little chance of DMVs improving the quality or efficiency of their services in a substantial way.

Even with seemingly straightforward services, like communicating information about titles and public hearings, public monopolies generally underperform. The evidence of this problem is revealed when trying to accomplish even the most rudimentary task, such as retrieving documents from a county clerk. Without an open market in which service providers can compete and innovate, the services offered by the public sector inevitably underperform.

One possible ground-up smart city solution to these problems, discussed in detail by Samuel Hammond, comes in the form of “government as a platform.” Rather than offering specific services in-house, city governments could open up and standardize data in order to allow for a dynamic marketplace of apps that offer public services. By providing developers with application programming interfaces (APIs), governments could allow for innovators with the right incentives to try new ways offering services to urban residents. Not sure which public schools your child is eligible for? There are three apps for that. Need straightforward information about how to get the permits needed for your business? Check out any number of zoning apps that work for your city. As the smartphone functions as a platform for an app market that provides services, urban governments could function as a platform for entrepreneurs to compete to address urban concerns.

There’s no need for technological utopianism: the smart city is being constructed from the ground-up, through the spontaneous efforts of app developers and users. The past 10 years have seen urban life transform in multiple ways. The next 10 years may be just as transformative, with a few overdue policy changes. Where app markets—specifically in the form of sharing economy apps—are butting up against antiquated regulations, city governments must embrace permissionless innovation and develop smarter rules for ensuring public safety. Where the public sector still has an important role to play, it must learn from the success of app markets. By transitioning from service provider to platform provider, local governments could potentially unleash the creative energies of millions of urban residents in developing solutions to local challenges.

Cities are growing, and as they grow, they’ll need to have the capacity to adapt and innovate in offering services to residents. Between now and 2050, 2.5 billion more humans will move into cities. If we’re already struggling to solve basic problems like traffic congestion and public health, it’s unlikely things will get any easier. Cities will surely need to integrate emerging technologies into their top-down plans; congestion tolling and ending the use of paper stand out as overdue fixes. Yet these top-down innovations must be complimented by an institutional shift toward enabling bottom-up innovation. By taking a hard look at what has enabled app markets to transform urban life, public officials might be able to make the changes needed to ensure the continuing improvement of urban life. The dumb city is dying. The question now becomes, will public officials allow the smart city to fully emerge in its place?

About Nolan Gray

Nolan Gray is a contributor to Market Urbanism and a graduate student in city and regional planning at Rutgers University. He is also a contributor to Strong Towns and his work has appeared in Citylab, Forbes, and Planetizen. His research interests include land-use regulation, real estate markets, economic development, and international urbanization. He is originally from Lexington, Kentucky.